Eye on Russia: Russia's resurgence

By CNN's Senior International Correspondent Matthew Chance

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MOSCOW, Russia (CNN) -- Russia has staged a remarkable comeback in recent years. Gone are the days, after the collapse of the Soviet Union, when the Kremlin depended on Western handouts to keep its fragile economy afloat. (Special Report: Eye on Russia)

The country has emerged as the world's biggest energy producer. It supplies Western Europe with more than a third of its natural gas, and pumps more oil than Saudi Arabia. It truly is an energy superpower.

High commodity prices have swelled the Kremlin's coffers. Russia now has the third largest reserve of foreign currency in the world -- by far the biggest in Europe. It's established a stabilization fund, now worth more than 116 billion dollars. It is paying off its foreign debts, ahead of schedule.

There is a growing middle class, as wealth once held only by a few oligarchs begins to trickle down to ordinary Russians. Within a few decades, at current rates of growth, Russia could emerge as a powerful economy, with Europe's biggest market.

But this remains a nation fraught with problems and uncertainty. The fast pace of economic growth has left a dangerously wide gap between rich and poor. Infrastructure, like transport systems, hospitals and schools, still suffer from acute under investment.

Corruption is rife: ask anyone who's stopped by a Moscow traffic cop. The Russian prosecutor general recently estimated that government officials in his country take $240 billion a year in bribes -- that's as much as the national budget.

Transparency international recently placed Russia 121 on it's list of least transparent places in which to do business, on par with Rwanda.

Contract killings of bankers, of journalists, of politicians and of Kremlin opponents have rocked Russian society and grabbed the international headlines.

Critics accuse president Vladimir Putin of backsliding on democracy, of trying to silence the free press, of encouraging nationalism and xenophobia, and of using the vast energy resources at Russia's disposal as a powerful weapon of foreign policy.

All of this has placed it increasingly at odds with powers like the United States, with whom tensions have grown, particularly over the issues of missile defense, Kosovo, and Iranian nuclear ambitions.

On top of all this, Russia is mired in a potentially devastating demographic crisis -- because of high death rates, its population is shrinking at a dangerous pace of about 800 thousand people every year. The World Bank warns the country's shrinking workforce could curtail future economic growth.

Yet there is hope. Despite myriad problems and challenges, Russia has proved itself a profitable and important recipient of inward foreign investment. Big brands, often with local partners, calculate that -- despite the risks -- this vast nation of 11 time zones and enormous resources is simply too important for them NOT to be there.

It is a country of great potential, and one which -- as history has shown us -- is better embraced by the rest of the world than allowed to turn away.